What’s a Generic Product?

What’s the difference between name-brand products and their store-branded equivalents?

Major retailers such as Costco, Safeway, and A&P contract with third-party manufacturers to make store-brand products, also known as private-label or generic products. And in many cases, those third-party manufacturers also make the national brands.

An investigation by Consumer Reports in 2005 looked into who might be making what. It found that brands like Chicken of the Sea (canned tuna) and Alcoa (Reynolds Wrap aluminum foil) also made products for retailers. Most companies are reluctant to confirm any of the details, though.

The Sara Lee Bakery Group comes close to saying that it is contracted to manufacture store-brand lines. “We do have a food-service division that supplies meat, bakery, coffee, and tea solutions to a broad base of food-service operators,” says Sara Matheu, Sara Lee’s media development director.

Generics emerged during the recession of the 1970s as a way to help consumers save money. “Those products were pretty grim and designed as an economic alternative,” says Tod Marks, senior editor at Consumer Reports magazine.

The bland black-and-white packaging associated with standard generic brands was purposefully made to be unattractive, “to connote the notion that these products were saving you a lot of money,” Marks says. They were designed inside and outside to keep prices down: In many ways those products were inferior as manufacturers sought out lower-quality fruits, meats, and other materials. Generic tea bags would contain tea dust instead of tea leaves, for example.

Nowadays, store-brand products don’t always rely on lower-quality ingredients. The best way to check is to compare the ingredients listed on the backs of products against one another. In many cases you’ll see the ingredients are exactly the same.

Even when using the same ingredients, store brands are often much cheaper than national brands. They cut costs by doing less marketing, advertising, and market research. And many store brands have overcome negative associations by smart branding. For example, Whole Foods’ 365 Everyday Value products are packaged to compete head-to-head with private labels by touting their organic ingredients and, in many cases, sustainable packaging.